Analysis: open innovation allows companies to use and benefit from valuable knowledge and expertise outside their own organisation
"No matter who you are, most of the brightest people don't work for you. They work for someone else. [So] you need a strategy that allows for innovation elsewhere". That's what Bill Joy, co-founder of Sun Microsystems famously said, and the quotation later became known as Joy's Law. Open Innovation is built on this very principle that valuable knowledge and innovation exists outside your organisation, but the challenge is how to find and integrate this knowledge for the organisation’s benefit.
What is open innovation?
Open Innovation is the process by which organisations find and integrate knowledge and innovation for idea generation or commercialisation opportunities. This can be achieved through collaboration with customers, suppliers, universities, complementors or even "the crowd". It has gained significant popularity in recent years with global brands adopting such a strategy including Lego (Lego Ideas), NASA (Nasa Solve), P&G (P&G Connect + Develop), Under Armour (Idea House) and Ikea (Ikea Co-create).
From RTÉ Archives, Cathy Halloran reports for RTÉ News on how trainee teachers in Mary Immaculate College Limerick are using Lego in the classroom in 2014
In these scenarios, organisations invite the crowd to participate in various idea competitions or crowdsourcing initiatives and the "winner" is rewarded for their contribution. In an Irish context, Musgrave Group have been successful in adopting open innovation through their SuperValu Food Academy initiative. Here, food start-ups collaborate by bringing innovative food products to the Irish market and provide a scale and reach otherwise unattainable due to their early stage.
Innovation cannot take place without both ideas and commercialisation occurring. Large organisations typically struggle at the early idea generation phase of innovation but are strong on commercialisation. The opposite is the case for young innovative companies who are strong at the idea generation phase, but struggle at the commercialisation phase. Open innovation then is a potential win-win opportunity for both parties.
Young innovative companies lack resources and open innovation provides important access to financial, human and capital resources which enable and facilitate scale and growth. Collaboration using open innovation provides these companies with access to a network that may find difficult to build on their own and also provides a global reach .
From RTÉ Radio 1's Countrywide, a report on Lily's Teashop, one of the companies supported by Supervalu's Food Academy programme
Other reasons for adopting open innovation include credibility and reputation. Partnering with large organisations can provide these companies with credibility and a strong reputation that may take others years to acquire. This provides potential opportunities to collaborate with other organisations.
The potential for learning and knowledge gain is also immense. Dynamic and agile companies can adapt and make decisions quickly and without fuss. However, they may lack experience and industry knowledge and can learn faster and expedite that scaling process through working with large organisations.
But open innovation is not easy and here are some suggestions for how new businesses can collaborate with large organisations
Use your network or if this is lacking, use Enterprise Ireland to help you develop your network. Seek introductions to large companies and start having conversations with those organisations you feel can add most value to your innovative product/service. Talk also to those companies you feel "fit" your organisational culture.
If and when you have secured that first meeting with a potential partner, DO YOUR HOMEWORK. The sheer size and scale of the organisation can be a frightening prospect. Do not be daunted – yes, there will be more people on the opposite side and the balance of power appears to be with them. However, this can be potentially alleviated through preparation. Prepare for that first meeting and every subsequent meeting. Be clear on your strategic objectives, know who you are meeting and find out what's their role within the organisation.
It is likely that the potential partner will try to extract as much information from you about your innovative product/service as possible. Don't be afraid to say no. It's OK to say "no, I cannot disclose that information". Protect your knowledge and intellectual property at all times.
Open Innovation takes patience and time. Sometimes it works, sometimes it doesn't.
Negotiate hard because you have everything to gain and you have worked hard to develop your innovative product/service. Seek legal advice and do not sell yourself short.
Closely manage the project. Build relationships (ideally face to face) with a few key people from the partner organisation. Learn how the organisation works and how they resource and manage projects. Keep a close eye and ensure that the project stays on track, meets the agreed strategic objectives and delivers on time.
Open Innovation takes patience and time. Sometimes it works, sometimes it doesn’t. But be confident and fearless – it will be worth the effort.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ